Sunday, February 15, 2009

Cows and Nationalization

All cows are brown.
Here is something brown.
Therefore, it is a cow.

Let's apply the same logic to nationalization:

Socialist countries nationalize their banks.
Our banks are insolvent and so we nationalize them.
Therefore, we are a socialist country.


More and more, we find talking heads and blog writings equating "Nationalization" with "Socialism". Historically, this knee-jerk reaction originates by examining the history of countries that have gone socialist: One of the first actions is to nationalize major businesses.

In reference to the potential US nationalization of the banks, this argument is completely misplaced. When a company is run so badly that it files for bankruptcy, it is run by a judge until it emerges from bankruptcy (or is liquidated under the judge's supervision.)

Are there really people that want to argue that bankruptcy is a socialist trait, because a government representative runs the company for a while?

The banks are insolvent; they need to be dealt with. Unless somebody has a better way of dealing with these resets, the banks are going to be government-run entities for a while.

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